Why are there so many expensive homes?

I see a lot of expensive houses being built in my area. A LOT. And the weird thing is that they’re being bought pretty quickly. Are these people just making more money than me? If so, what are they doing for a living? Or are they just living house poor? How exactly are they affording these places?

Edit: For reference, my neighborhood is starting to become popular (because the other popular neighborhoods have priced most people out of affording places there). The normal price of newer homes here is $700k. My home, built in 1965, which is 2500sq ft on a quarter acre of land, is $500k.

Swedneck,
@Swedneck@discuss.tchncs.de avatar

Generally the problem simply boils down to there not being enough housing, it’s extremely difficult for it to remain expensive if you have more housing than you have people.

What most of the world needs right now are million programmes, just slap down a bunch of areas with commie blocks wherever you can. Sweden and other countries did this back around the 60’s and wouldn’t you know it those apartments remain vital for providing people with access to cheap housing.

Hazdaz,

This is funny, because I consider OP’s house to be obnoxiously expensive, let alone all the newer homes they mention.

There are MANY calculators out there as to how much house one can afford, and personally I think most of them over-estimate the amount. But based on very rough numbers, you could spend about 3x to 4x your yearly salary on a house. So to afford a $500k house, one “should” be in the $150k/year range. To afford a $700k house, one should be in the $200k/year salary range.

Personally I think both those numbers are bonkers and rather live well below my means than be house-poor.

The reason there are just so many expensive homes is that people are terrible at personal finances. They don’t mind being in debt and then there is the awful FOMO mentality that is helping drive home prices up for no good reason. Add in the fact that for years now new home construction has simply not kept up. There were homes being built, of course, but many of them were on the top end of the market because local town governments rather get the taxes for ten $10M homes, rather than force developers to build 50 $250k homes. So there is so much blame to pass around.

TheGiantKorean,
@TheGiantKorean@lemmy.world avatar

I think it’s awful that people are willing to be house poor in order to live in an expensive home, likely with no way to deal with it if something goes sideways.

FWIW, we bought the house when it was $330k with a sizeable down payment. We wanted to make sure that only one of us can pay for it, in case the other loses their job, or good forbid something worse happens.

Hazdaz,

You sound like me! Your situation and everything is similar. I also refuse to follow the herd when it comes to 30 year loans. No way, no how am I being enslaved by debt for that long.

SpaceNoodle,

It’s not FOMO, it’s financial sanity. If I pay rent for another thirty years, I have nothing to show for it except a period of non-homelessness and years more of rent to come. If I pay a mortgage for the same amount for thirty years, I’m rewarded with a house for the rest of my life and no more mortgage - and I can resell the house when it no longer suits my needs, or give it to a younger family member

neanderthal,

It’s not that simple. It is mortgage+insurance+maintenance

Rent is just rent.

You MAY be able to resell the house if the location is somewhere people want to live in several decades. All it takes is a major economic source to dry up. A military base closing, a factory shutting down, etc can wreck your property value.

TheGiantKorean,
@TheGiantKorean@lemmy.world avatar

Ramit Sethi does a good job of breaking this all down WRT to home ownership vs renting. He basically says the same thing as you.

It was worth it for us to buy, so we did. We’ve already replaced the roof and the hot water heater, though, and the furnace is next. It adds up.

neanderthal,

THANK YOU! I get so tired of: buy good. Rent bad. The answer is it depends. 2008 was only 15 years ago. Many people lost boat loads of money from it. People HAVE lost lots of money from factory closures, base closures, market bubbles, a highway being built, etc

The ideal situation is a variety of housing options, for sale and rent.

KirbyQK,

The vast majority of people live in or around major cities. Those aren’t going to evaporate. The kinds of towns that exist only to support a single resource like you mentioned are so few and have so small a population that you could close and relocate half of them to other towns and cities across the country without them even noticing the increase.

neanderthal,

Tell that to the home owners whose equity is wiped out when the factories were offshored or the base closed.

The point is, there are no guarantees. Buy vs rent depends on a person’s circumstances. Buying has risks. People have lost lots of money by buying at the wrong time (like 2008) or the wrong place.

Markets don’t always go up. Market prices can be very disconnected from reality as we have seen with many bubbles throughout the years.

KirbyQK,

My point is that we can’t say “but what about the 1%!?” and end a discussion about the value of investing in buying the place you live based on that 1 counter argument. That’s how you get republicans and rampant unregulated capitalism destroying the lives of the many to benefit the few.

neanderthal,

It was a lot more than 1% in 2008. In the US, 1% is 3 million people.

This discussion about renting vs owning and the overall real estate market are related but not the same thing.

My point is, owning isn’t always the best option, it has risks that vary depending on location, it isn’t always the best financial moving.

Always and never are rarely true. As I said in another comment, the ideal situation is a variety of housing options available for buying or renting.

Back in 2007, I was working on a contract that could have had me moving on short notice, in a housing bubble. Buying would have been insane in that market and I would have lost a few hundred k. Even if it wasn’t a bubble, buying would have put me in a worse situation than renting due to transaction costs, interest, insurance, taxes, and opportunity costs. I own now.

KirbyQK,

I say 1% as hyperbole as while I can’t say what portion it is, it’s small and shouldn’t be a show stopper.

Other than in very rare circumstances, unless the govt. or your employer is paying your rent, buying should NEVER be worse than renting. The fact that more and more people don’t even have the option, even when a mortgage would actually work out way cheaper than rent, is insane. I don’t know the US market, but where I live a mortgage is cheaper or about the same as paying rent, after insurance & maintenance, basically everywhere.

Taxes on the purchase are a 1-off cost that might add up to a few month’s rent, it stings but it doesn’t change the math. Sure you have to pay interest, but at least a portion of your repayments is going permanently towards your financial future. Paying rent you may as well be handing that money your landlord and watching them burn it for all the return you would ever see from it. There’s no scenario where paying rent very long term should be better for anyone.

neanderthal,

The fact that more and more people don’t even have the option

I agree with you here. A healthy housing markets should have a variety of housing available at reasonable costs. For rent and sale. In the US, the causes of that are euclidean zoning, NIMBYism, and under regulated capitalism.

I don’t know the US market"

That explains a lot of the disconnect. Buying with minimal risk isn’t feasible in a lot of places in the US.

In the US, it isn’t uncommon for smaller cities to be economically dependent on one particular thing, like a base, university, factory, agriculture, mine, etc. West Virginia is a great example. Their economy is pretty dependent on coal. This is why their democratic senator tends to vote with Republicans on matters that would interfere with coal mining. If the next federal election is a massive slide towards Democrats, the WV economy will be devastated unless they come up with a way to replace coal mining. The real estate market would absolutely tank. Anyone that bought in the previous 5 years would regret it.

A place being devastated economically due to a closure happens. The US is large, so there might not be any other major economic source for 75+km. Even if there are, the distance will in all likelihood cause a large decline in real estate prices.

A house in any particular areas value depends on decisions by the federal government, state government, local government, a school board (school districts effect real estate prices here), and sometimes a corporation. Any one of those entities could (and has) turn a 400k house into a < 300k house in very short order. It happened almost nationwide here in 2008 due to the removal of financial market regulations.

Maybe where you live these kinds of risks aren’t common, in that case buying is going to make more sense in more cases. In the US, buying in an area without economic diversity is a lot more risky than a lot of people realize.

Another issue in the US is housing types. A lot of areas have apartments for rent or 3+ BR SFH to buy. A single person would have a massive opportunity cost and take on unnecessary HVAC costs, etc buying in these areas. Renting a 1BR or studio would be a much lower monthly cost. Renting and investing the difference would be a better move in most cases.

Buying should generally be a better option when someone plans to stay in an area for while. I won’t say always though. Some parts of the US I would never buy real estate.

Am I starting to make more sense?

SpaceNoodle,

Yeah, I was waiting for this disingenuous pap. It can still be easily cheaper to buy. If it weren’t, why would anyone buy houses to rent out?

neanderthal,

Disingenuous…wow. Sometimes people just disagree and for good reason.

Buying a house is not a guaranteed way to build wealth. Ask those thought bought around 2008 and lost their shirts.

It doesn’t ALWAYS make sense to buy or rent. The honest answer is it depends. A location might be great…NOW. Case in point, Detroit. Lot’s of factories closed down. Or military towns during the many base closures in the 90s.

People buying houses to rent can and do lose money on it.

SpaceNoodle,

And nobody ever built equity from renting.

neanderthal,

Nobody ever went underwater on a house they can’t sell renting.

Things aren’t always black and white and individual circumstances matter. Sometimes people work on short term contracts and aren’t going to live somewhere for very long. Sometimes people need to move in a hurry and don’t have time to do due diligence buying a property.

As much as some of you may hate it, renting fills a need and isn’t always a bad thing.

The problem with the housing market is part euclidean zoning, part NIMBYism, part capitalism on too long of a leash. It really has nothing to do with rent vs buy.

Veraxus, (edited )
@Veraxus@kbin.social avatar

They are not being bought by regular people like you - they are being bought by investment companies, hedge funds, and filthy rich investors... all for the the sole purpose of turning them into rentals.

By turning them into rentals, they keep supply low which increases prices... which prevents people from buying, keeping rental demand high, which also lets them charge exorbitant rental rates. They are gaming both sides of the system to ensure that us peasants can be milked dry over a fundamental human need.

marcos,

That does not add up.

Home rental and ownership are substitutes. If they are renting those homes, they are reducing the demand for ownership. And adding renting unities can not allow them to charge exorbitant rates.

What is keeping those prices high is something else.

Bookmeat, (edited )

They are NOT reducing demand. People want to own because rental is not capital building. Demand is suppressed, but not reduced. Supply is constrained due to rentals, thus high prices.

This substitution is mechanical, but psychology is what actually drives prices.

Veraxus,
@Veraxus@kbin.social avatar

This is pretty basic math. Just think about Monopoly (yes, the board game).

Housing is a finite resource. You can buy it or you can rent it. When you buy, you build equity. When you rent, it's pure expenditure.

So what happens when nobody can buy? They are forced to rent. Demand for rentals rises, which allows landlords to raise their rents.

So how does someone with very deep pockets turn this to their advantage?

First, starting one metropolitan area at a time, you buy up everything you can. If you coordinate with other investors, all the better. The goal is to strangle supply for buyers and prevent anyone who can't pay cash upfront from making a purchase. When people are unable to buy, they are forced to rent. So for buyers supply is down and costs are WAY up, and being locked out of buying means demand is up for rentals.

Now, renters also aren't building equity; when means it is perpetually more difficult for them to buy in the future as long as they kept away from that equity-building opportunity.

So as an "investor" you can now have a lot of different levers for manipulating both the supply and demand sides of the housing market. For example... what happens if you have more rental property than people willing to pay your asking price? Won't you be forced to lower your prices? First of all, that rarely happens - because as an investor, you target places that already have reliable, consistent demand (e.g. big cities and metropolitan areas). If you have to occasionally let a property go unoccupied for a few months, it's still no biggie... you keep those prices high and do not, under any circumstances, devalue the market (for your own sake as well as your investment cronies). Now, if there were competition, prices might be driven down... so how do you avoid competition? You collude. But that's illegal... so to avoid accusations of collusion and price fixing, you farm out your rates to a third party service that all your cronies also use: RealPage. It's not collusion or price fixing if you use a middleman. So now you are making bank on rental rates that will see a full return on your (higher than the properties value) investment in 15 years or less.

This has been going on for well over a decade, and these "investors" are now printing money on some of their earliest purchases, with no intention of EVER putting anything back on the market.

TL;DR; Buy all the supply, force plebes to rent, control the prices, profit. Just like Monopoly.

jmanjones, (edited )

Home rental and ownership are not substitutable to each other nor does renting lower the demand for ownership. The amount of tax exemptions of buying a home, esp as first buyer, are decent over rental. Find out what a buyer’s vs seller’s market is. Look at what the avg. capital gains are for homeownership vs home rental (which are basically none). You still pay property tax on rentals such as apartments. Buying real estate is an investment, meaning you expect and should make returns on it (even if its just from selling the home years from initial purchase). A lot of this can change by state but generally, and overwhelmingly so its rings true across the US.

Look, I’ll be straight up, you seem like you are coming from a place of someone who has never closed on property - which is 100% okay. but you are wrong, as what you said was not an opinion but just factually wrong.

Zuberi,

DRS GME. They need collateral for their bad bet

Tangent,
@Tangent@lemmy.world avatar

In my area the biggest factor is multiple families purchasing homes together. When you’re splitting the mortgage it’s a lot more affordable.

Smokeydope, (edited )
@Smokeydope@lemmy.world avatar

Because the system is rigged, the wet dream of the people who own america is a purely subscription/rent based economy where you own nothing and they own everything. Wake up, move somewhere more rural, or live out of a converted van/box truck. Otherwise sign the dotted line on half a million in mortgage debt and work the rest of your life to MAYBE pay it off before you die or your life burns down from a failed marriage or some other BS. I have no sympathy for grown ass adults who knowingly sign up for decades if indentured wagie slavery just so they can live in a suburbanite hellhole. “B-b-but I want a faaamilllyyy!” Good. Before you plop out some kids save up enough money to buy land and build a homestead out of pocket. DO NOT GET INTO DEBT IF YOU CAN HELP IT. DO NOT PAY A LANDLORD ALMOST ALL OF YOUR PAY. Other choices exist.

Vlyn,

Yeah, show me how to not get into debt and be able to afford both land and a house. People usually don’t have half a million+ lying around burning a hole in their pockets.

Semi-Hemi-Demigod,
@Semi-Hemi-Demigod@kbin.social avatar

The profit margin per square foot on a large "luxury" housing unit is a lot higher than on a smaller, cheaper unit. Plus you won't get people upset that you're eroding the price of their homes by building cheaper ones, so NIMBYs won't stop you.

marcos,

The profit margin per square foot on a large “luxury” housing unit is a lot higher than on a smaller, cheaper unit.

This is the weird part. It’s not normal by any means, and there must be something causing it to happen.

The normal situation is that cheaper homes are more profitable by area.

Semi-Hemi-Demigod,
@Semi-Hemi-Demigod@kbin.social avatar

It’s pretty simple: The cost to make the structure of a house is pretty much the same for luxury or basic models: Framing, electrical, foundation, etc.

But if you throw in some cheap granite countertops, a fancy tub, and up-market flooring suddenly it’s a luxury house and you can charge twice as much, despite it not costing nearly twice as much to build.

Same thing goes for cars: A luxury car just has different fabric and some badges, but they charge way more than a comparable econobox because it’s “luxury.”

fhqwgads,

From what I’ve seen this has been turned upside down by… well essentially automation, just not the kind everyone is afraid of.

Between better techniques and tools, a lot of construction is significantly faster than it used to be, to the point that a job that’s smaller has enough… I guess “opportunity” cost that it can be significantly less profitable.

Let’s say I’m a plumber. In the 80s, I would use copper pipe and have to solder all the connections - even a small job would take a long time - on the order of days. If I do a small house it takes way less time than a big house.

But now instead I would put in long lines of PEX with crimp on connectors. It’s like 4x as fast so it should be 4x cheaper right? Except now I have to drive to 4 different jobs to work all day, set up and tear down 4 times, deal with 4 different customers and invoices, etc. OR I can do 1 big house and make essentially the same money since I cut out all the extra work.

Add to that that most people are going to use more expensive finishes on larger houses that I basically just take a percentage of, and they might request something specialty and working on small affordable houses seems like a terrible business plan.

fhqwgads,

As someone who works with people in residential construction fairly often, this is the answer - and it’s why they don’t build new “starter” homes anymore. It’s very difficult to turn a profit on a single family home that would be considered affordable most places.

Basically, its very little extra effort and expense to build a luxury house compared to an inexpensive one, and your profit margin goes from very thin to decent.

Anecdotally in my area, most residential new construction is going to retirees who have a nest egg and the sale now very expensive house, or couples who sold an inherited house. Occasionally there are people who are remotely working or people building as an investment property, but they’re in the minority.

Blamemeta,

Investors, rich immigrants, just a lot of rich people in general. Sucks, and I would blame the government.

starlinguk,
@starlinguk@kbin.social avatar

Where I live they're all bought by investors/landlords.

Rooki,
@Rooki@lemmy.world avatar

@TheGiantKorean please make your title a question.

Its our Rule no. 1!

TheGiantKorean,
@TheGiantKorean@lemmy.world avatar

Sorry! Fixed it.

Potatos_are_not_friends, (edited )

It’s about perspective.

I have tech coworkers who make about $250k in California take a pay cut to work remotely, so they can move someplace affordable. And they’ve said things like “This house is 800k for 1200 sqft?! What a steal!” Because their prior baseline in CA was it being $1.2million.

Izzy,
@Izzy@lemmy.world avatar

Meanwhile I bought my 1200 sqft house for $128k in the midwest. I suppose it has doubled in value since 2016, but still.

souma,

They’re being built cheap by large corporations

satanmat,

I’ll add a “Yes and…”

Don’t underestimate people’s willingness to go into debt, for a bigger house because it will “look good”

Gotta keep up on the pretense of being successful.

downpunxx,
@downpunxx@kbin.social avatar

yes, there are a great deal of people that are making far more than you do. foreign and corporate investment snap up a great many private homes. short term rental investments have exploded so people with credit can buy homes, rent them out in the long or short term, and pay off the mortgages. the american dream centered around owning your own home, since the turn of the century has receded further and further away, where it was once the norm for the post ware middle class, doesn't really exist any longer. it's the haves and have nots in the united states.

wildbus8979, (edited )

All this talk of foreign investors. But the reality is they represent a small proportion of single family homes[1]. It’s easy to blame foreigners, but the real problem is domestic. It’s corporations. Corporations are being all the housing[2]. And they don’t mind sitting on their invest, even vacant, for years. So yeah, y’all keep the bigotery going and blame foreing investors, you’re playing right into capitalism’s hand.

  1. aljazeera.com/…/why-is-canada-banning-foreign-hom…

Foreign owners only account for a small share of the Canadian real estate market. According to Statistics Canada, a government website, non-residents owned 2.2 percent of residential properties in Ontario and 3.1 percent in British Columbia in 2020. The percentages were 2.7 and 4.2 in the Toronto and Vancouver metropolitan areas, respectively.

  1. todayshomeowner.com/…/are-big-companies-buying-up…

According to data reported by the PEW Trust and originally gathered by CoreLogic, as of 2022, investment companies take up about **a quarter [25%]**of the single-family home market.

Retiring,
@Retiring@lemmy.ml avatar

Whether the investors are foreign or domestic, doesn’t matter, as long as governments allow living space to be gambled with, people like OP (I assume OP is working class) are very unlikely to ever own their house/apartment.

wildbus8979,

It matters because blaming foreign investors is a diversion used to avoid bringing forth actual solutions.

Lemmylaugh,

Another take is that it’s the developers who is to blame for the high prices. What would happen if they stopped buying land? Short term? Disaster, no new houses, prices sky rocket. Long term? With no new supply investors and foreign buyers will just leave the market since it’s not making money. As they leave, more supply will be available for the normal people.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

todayshomeowner.com/…/are-big-companies-buying-up…

I feel like this article didn’t do a great job of answering the question. They didn’t really determine whether big corporations are buying homes, they determined that investors are buying homes. The actual text:

According to data reported by the PEW Trust and originally gathered by CoreLogic, as of 2022, investment companies take up about a quarter of the single-family home market. Specifically,investor purchases accounted for 22% of all American homes in 2022.

Those two statements are not equivalent. “Investor” could be a single individual buying a home with the intent of offering it as a vacation rental when not in use. It could be somebody who bought a duplex and rents the other unit out until their parents retire. It could be a house flipper who does 1 house at a time – each time registering an “investor purchase”.

Even “corporation” doesn’t really mean anything; a “corporation” could be an LLC with one employee, the owner.

And even when big corporations buy single-family homes, it’s not clear to me that this has a lasting economic impact. It sounds like a lot of these investment companies are renting the the homes or flipping them. Ultimately, demand is still demand. Somebody has to be there to buy or rent the home for these investments to make sense, so any price increase resulting from this investment activity is not an external, artificial pressure. It’s a real representation of economic value, it is a price that the next occupants are willing to pay.

NielsBohron, (edited )

I have a very specific viewpoint on this issue, as I live in a vacation destination. Various investors are buying up every property that comes up for sale in my community (large corporations, small companies, wealthy individuals looking for vacation homes, etc.)

Every single property that gets bought, gets renovated or otherwise improved to the point that there’s no chance in hell anyone living and working in the community full-time can afford to buy, unless they bought their first property before 2016. Since then, home ownership among my colleagues has become a pipe dream (and without giving away too many personal details, let me just say my colleagues and I are well-educated professionals making way above the median income for jobs in the area).

As I type this out, I’m listening to a million-dollar house being built in the lot behind me (which will almost certainly sit vacant >80% of the time), a shit rental being turned over next door (which charges $3k/mo for a 3/1.5), and two short-term vacation rentals partying across the street (which usually charge at least $300-$400/night).

Regardless of who it is, investors buying up housing is a huge problem for people that are trying to own their own home, especially first-time buyers.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

With respect, you’re missing the point.

Sellers don’t determine price. Buyers do. “Investors” (big, small, whatever) are selling homes at those prices (or renting, or VRBOing) because there are customers ready to buy the next available unit. If customers aren’t willing to buy at that price, then the seller will lower the price. Or never build the big house in the first place. Or never renovate. Who would spend money on an investment when nobody will buy it?

They can only sell for those prices because buyers are ready to buy.

Economists have a concept of “economic value”. Regardless of price, “economic value” it what the next buyer is willing to pay for an item RIGHT NOW. People have a lot of weird ideas about what the “value” of something is, and they’ll include all sorts of non-monetary factors because they think value is a feeling or concept of utility that particularly applies to them. They value “walkability” or “views” or “quaint antique design”, or whatever.

But inasmuch as “value” has any objective meaning, the best one economists have managed to come up with is economic value – the price that a unit of something will sell for at this very moment. And I humbly suggest that the economic value of housing in your area something is determined entirely by the buyer: the person or entity that is willing to buy the next available unit of housing.

investors buying up housing is a huge problem for people that are trying to own their own home, especially first-time buyers

If those buyers can’t outbid all the other buyers, then they weren’t going to get a home anyway. This has nothing to do with the seller.

Devi,

You and the other guy are talking about two different things. You're trying to explain supply and demand in a very factual way, the other guy is explaining to you how this is hurting actual people who need somewhere to live.

They haven't missed the point at all but are talking about the human element here.

Blaidd,

They can only sell for those prices because buyers are ready to buy

Because the alternative is to be homeless.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

Or leave the area for lower prices somewhere else.

Blaidd,

So quit your job and pay hundreds, maybe even thousands, of dollars to move somewhere different where you no longer have a source of income and don’t know anyone?

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

I’m not saying I like it, that’s just how it is. As a consumer of housing, like anything else, when you can’t afford what you want you have to get something less.

Blaidd,

No, this is not how it is. In order to rent an apartment you have to show proof of income, and people who can’t afford a studio apartment where they live also cannot afford to move. What you are suggesting is literally not possible. You might as well tell someone to grow wings and make a nest in the clouds.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

You can’t afford steak, you eat chicken, you can’t afford that, you eat beans. You can’t afford that, you’re in trouble.

I didn’t create the system, man. I get it, it’s hell to be poor. But corporations buying and flipping homes doesn’t have much to do with the plight of people who can’t afford studio apartments. If somebody else is ready to pay a higher rent than you are for the same apartment, they’re gonna get it. Doesn’t matter whether the landlord is a friendly grandma or a faceless megacorp, nobody is gonna willingly sell something for less.

leadore,
@leadore@kbin.social avatar

“Investors” (big, small, whatever) are selling homes at those prices (or renting, or VRBOing) because there are customers ready to buy the next available unit.

The "investors" are the buyers/customers, and they aren't reselling these houses--they're renting them out. It's mostly corporations increasingly doing over the last 15 years or so (I think it started around the 2008 financial crisis). They have the capital to do it and so regular people are being priced out more and more as this practice keeps driving up prices.

It didn't used to be this way. Even in my "cheap" area, when I bought my house back in 2005 all but one house on my block were owner-occupied. Now, more than half the houses are rentals because whenever one came up for sale it was bought by a rental company. This is a serious crisis that needs to be addressed.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

The “investors” are the buyers/customers, and they aren’t reselling these houses–they’re renting them out.

Renting them out is still selling them, just another kind of selling. The company can only charge rent if there is a renter willing to pay. Again, the buyer determines price – if rent is too high, there will be no renters.

leadore,
@leadore@kbin.social avatar

Renting them out is not selling, it's an ongoing income source for the owner. The renter does not determine the price when the alternative is to move elsewhere or live out of your car. There's simply not enough housing--supply is limited. It's not a simple equation like a factory adjusting the output and price of its widgets. If things were as simple as you say, there wouldn't be such a severe housing crisis in the US. Just search for US housing crisis, there are thousands of articles explaining what's going on.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

The renter does not determine the price when the alternative is to move elsewhere or live out of your car.

The renter is the person who pays the rent, not the person who can’t afford it. If someone gets evicted because they can’t pay rent, they are replaced with someone who will.

You’re on the right track, though. Over-regulation, opposition to new construction, and opposition to multi-family construction are the reason buyers are willing to pay more and more in HCOL areas.

ChonkyOwlbear,

Part of the problem is it’s still more profitable to build an expensive property and wait a couple years to find a buyer who can afford it than to build an affordable property which will sell right away.

RickRussell_CA,
@RickRussell_CA@lemmy.world avatar

True, there is a “frictional” effect on occupancy rate, that causes property to be idle for some time. I’m about to buy a house that was built by somebody else, but they decided they couldn’t afford it, and backed out, so it’s been sitting there new & idle for a couple of months.

When there is a lot of economic dislocation, or major demographic changes, that frictional rate of idle property may spike up (e.g. in the wake of the 2008 recession/real estate bubble, when some owners decided they would rather wait for recovery than find a buyer at a huge discount), but it’s a transient effect.

maporita,

Buying as an investment, whether by foreigners, corporations or whatever, is a symptom not a cause of the housing shortage. The cause of the housing shortage is that we’re not building enough houses. That’s it. Supply and demand, same as it’s always been. The solution is to reduce demand or increase supply.

NielsBohron, (edited )

That doesn’t mean “is a symptom, not a cause.” If it’s actually supply and demand, then the investors buying the housing is part of the problem, not just a symptom. The investors are decreasing supply and increasing demand, so it’s really two sides of the same coin.

Personally, I think that just building more houses isn’t the answer, because the corporations can just keep buying them up. This will continue to artificially decrease supply and increase demand, which keeps them making a profit. And as long as corporations can make a profit with this model, they will (and people will continue to suffer).

VelociCatTurd,

Yes let me buy a house on someone else’s land I’m sure they won’t mind. And if there’s not enough land left in America, we just need to increase the supply of land.

the free market won’t fix this because it’s not a bug, it’s a feature.

maporita,

If the owner of the land is selling it then they obviously don’t mind. Or do you believe that no-one should own land?

VelociCatTurd,

Actually, I’ve never thought about it, but the concept of “owning” land is pretty absurd tbh. There are people born everyday, beholden to imaginary lines drawn by dead fuckers hundreds or thousands of years ago.

maporita,

Abolishing land ownership sounds like an attractive idea, the problem is that it doesn’t work well in practice. Ownership of land, and a legal system to protect it, brings remarkable economic benefits. It allows owners to raise capital using the land as collateral and then to develop the land. A free market ensures that land is correctly valued. When values are as by government they tend to be incorrect or, worse, deliberately distorted by corruption. A quick look around the world shows that the richest countries all allow private ownership of land. China is the notable exception. It’s true that productivity in China has increased dramatically over the past few decades but this has been driven by urban centers and manufacturing… rural areas, where land remains under state control remain poor and impoverished.

Lemmylaugh,

That’s short sighted. Developers collude with each other and investors. There is serious conflict of interest since everyone on the supply side has lots to gain in ever rising house prices.

Ironically getting rid or severely limiting these developers to reduce supply is what’s needed to reduce prices. Not short term, but the long hard way until you take away the “investment “ side of real estate. Lower supply until it’s not profitable for these developers and investors.

BadAdvice,

It’s the chineses. Buying real estate is kind of their thing, and since their home grown real estate ventures aren’t maturing well (check out evergrande), they’re out in other ponds buying up what they can. Down here in sunny California, we’ve got entire neighborhoods bought out by Chinese investors before ground is even broken. Then, when it’s time to actually sell, they crank up the price of everything by 60-100%. That’s how you get a shitty stucco condominium going for $2m+ in South city. It’s all a scam.

brambledog,

I don’t think you can or should blame immigrants for America being a playground for the rich where the citizens are just a servicing class.

BadAdvice,

I’m not blaming immigrants at all. I’m blaming chineses. It’s their culture bud. There are thousands of years of written records for that country, and buying/stealing land is pretty much the only cultural constant over every dynasty, warlord, or ruler you care to read about. Mao, despite killing millions with ballslapping ignorance, was one of the first to seriously go after landlords. Unfortunately, money always wins so now they’re back to everybody gotta get theirs first. The world is a zero sum rock as far as most people are concerned, there and here.

brambledog,

That’s pure racism.

But I get it, you aren’t allowed to be angry at the actual people responsible for your lack of ability of to afford housing, because if you did, you would have to acknowledge that you helped put the people in place who screwed you.

So instead, we will pretend our problems are the fault of other people. Because we are cowards. Yes?

BadAdvice,

There is no fault. Lmao It’s about money. It’s always about money. And it turns out chineses are real good, culturally, at making money. Something about having few qualms about where it comes from. Its almost funny being able to see a 100 story high-rise from a village that would be third world by any standard, but its actually sad. But that’s just the chineses, doing China things. It’s only been that way since the Han dynasty, if not longer.

brambledog,

Every large city in the US has tent cities within yards of a skyscraper.

Your criticism of the Chinese in this response is that they are an unbalanced mix of too rich and too poor. Kind of sounds like our country, huh?

Your racism doesn’t appear to be based in logic here. Is that on oversight on your part or was it a conscious decision?

ryathal,

You need a lot more info. Are these retirement condos, older people downsizing after kids, California migrants, a popular or quickly growing neighborhood, vacation rentals, corporate speculation, or just normal cost housing for your area.

TheGiantKorean,
@TheGiantKorean@lemmy.world avatar

Edited my post to provide some more info. I have no idea what the average salary is here.

2d,
@2d@kbin.social avatar

information is readily available on this thing we call the internet

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